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Converting a property into an HMO (Part 1)

Shared from Tax Insider: Converting a property into an HMO (Part 1)
By Lee Sharpe, July 2024

Lee Sharpe considers the tax implications for adapting a property for designation as a house in multiple occupation. 

We shall use a case study to illustrate some of the key principles to consider when taking a property into a letting business, and in particular, where adapting an ordinary dwelling into an house in multiple occupation (HMO). 

Case study: Yasmin  

Yasmin is an established BTL property investor. She acquires the freehold in a substantial single dwelling-house, with four bedrooms, from its former owner-occupier. Let us say that the property cost £850,000, harks from a time when rooms were generously proportioned, and was in a good state of repair overall on acquisition, although the roof was showing its age, and the tiles would likely need replacing in the next few years. Fundamentally, the property is eminently capable of being lived in and let out. <>

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